Inventory management is a critical component for achieving success and elevating performance in the ASC industry. After personnel, most ambulatory surgery centers spend more on supply costs than anything else. Controlling supply costs and inventory management processes is essential in order for ASCs to maximize performance.
However, many ASCs struggle to deploy efficient and effective inventory management processes, often due to poor or inaccurate data entry. For example, materials management may receive a medical supplies order and fail to input all the necessary information into the appropriate inventory management system. Or, they may update the number of inventory items as needed, but forget to change the price.
Not being detailed enough to maintain accurate data entry can cause many problems for ASCs. If various clinical departments don’t update inventory numbers in the system after a case, then all pricing, inventory, and accounting data are essentially inaccurate.
Achieving inventory management accuracy requires discipline, persistence, and the right strategic approach. In this article, we’ll discuss how you can tighten up your ASC’s inventory management to maximize your facility’s performance.
Benefits of Improving ASC Inventory Management
Before we dive into the steps for improving your inventory management, let’s take a look at the various benefits. By proactively managing your ASC’s inventory, you can:
Drive significant cost savings.
The link between accurate data entry and financial health isn’t often realized by ASC administrators or materials management—but understanding this particular point is critical. Carefully tracking your ASC’s supply costs and utilization can provide you with the insights you need to reduce inventory expenses, save money, increase monthly cash flow, and maximize profitability.
Uncover workflow inefficiencies.
Process inefficiencies can impede ASC inventory management and lead to data entry errors, supply shortages, financial inaccuracies, and other unnecessary challenges. However, by pinpointing and addressing manual, time-intensive processes, you can streamline workflows and improve your financial and operational performance.
Optimize facility performance.
Capturing accurate medical supplies data can help you make better strategic decisions for your center overall. This will allow you to free up time, money, and other resources to provide care that’s better quality for your patients and more profitable for your business.
Negotiate better contracts.
Strategic information helps negotiate better payer contracts and target which specialties to provide at your surgery center. Accurate supply cost information helps determine which surgeries you should and shouldn’t be offering as well as which specialties are bringing in the most profit to your center and which payers are working the best.
Assessing whether your organization is more profitable with one specialty over another and your payer margins—whether you’re making enough to cover the cost—plays a big role in maximizing your ASC’s contribution margin.
How to Improve Your ASC’s Inventory Management
Follow these six steps to tighten up your center’s inventory management:
- Assess your inventory management in its current state.
Start by auditing your current inventory management processes, data, and known pain points. This will enable you to leverage your facility data to see where you can improve and in which areas you’re already excelling. Look for obvious inefficiencies in your inventory management workflows and identify any obvious, low-hanging fruit areas for improvement, standardization, and cost savings.
- Compare your ASC’s inventory ratios with benchmarks.
Data plays a fundamental part in an ASC’s performance—which is why tracking and comparing your facility’s inventory ratios with internal and external benchmarks is important. Seeing how your ASC metrics compare to competitors—as well as your own progress over time—will help guide your inventory management strategy to point you in the right direction. Commonly tracked ASC metrics related to medical supplies include inventory turns/turnover, supply cost utilization, and holding inventory ratio.
- Track and adjust your highest inventory expenses.
Another way you can make improvements is to assess your clinical processes and determine if any cost-effective adjustments can be made without diminishing the quality of care. Dig deep into your ASC’s financial data to determine inventory costs by specialty, physician, case, location, and department: Which ones have the highest and lowest medical supply costs? From there, you can make decisions to optimize your facility’s surgical specialty mix and subsequent inventory management.
- Negotiate better contracted rates with supply vendors.
Your payer contracts and vendor pricing might also need an overhaul. Work with payers, supply vendors, and/or a group purchasing organization to negotiate better contracted rates on various medical supplies, including physician preference items. This process will help you standardize supply costs to ensure every department and location is paying the same optimized contract price for the same supplies.
- Leverage automation and inventory tracking solutions.
Technology can help with automating manual inventory management tasks to work more efficiently and streamline workflows. Business intelligence tools for data analysis and RFID technology for real-time inventory tracking can both improve your visibility into your facility’s processes, performance, and opportunities.
- Outsource your materials and inventory management.
After all is said and done, if you’re still scratching your head trying to come up with ways to tighten up your ASC's inventory management, it may be time to call in the pros. Consider outsourcing your inventory management accounting to industry experts such as Amblitel for help designing policies, training ASC staff, analyzing supply cost utilization, negotiating contract pricing with vendors, and more.
Interested in finding out more? Schedule a consultation to learn all about Amblitel’s ambulatory surgery center inventory management accounting services.